The Attorney General v The United Policyholders Group et Al
| Jurisdiction | Trinidad & Tobago |
| Judge | Narine, J.A. |
| Judgment Date | 23 June 2014 |
| Neutral Citation | TT 2014 CA 28 |
| Docket Number | Civil Appeal No. 82 of 2013; CV2011-04702 |
| Court | Court of Appeal (Trinidad and Tobago) |
| Date | 23 June 2014 |
Court of Appeal
Archie, C.J.; Narine, J.A.; Smith J.A.
Civil Appeal No. 82 of 2013; CV2011-04702
Mr. A. Newman Q.C., Mr. R. Martineau S.C., Ms. E. Donaldson-Honeywell S.C, Prof. S. Juss, Mr. K. Ramkissoon instructed by Ms. Z. Haynes and Ms. P. Alexander for the appellant.
Mr. P. Knox Q.C., Mr. R.L. Maharaj S.C. and Ms. N. Badal instructed by Ms. V. Maharaj for the respondents.
Judicial review - Legitimate expectation — Requirements for a promise to form the basis of a legitimate expectation — Burden of proof in legitimate expectation — Breach of legitimate expectation — Overriding public interest — Macro-economic or micro-political matters involve less intervention by the court — Illegality and irrationality — Wednesbury unreasonableness — Appeal dismissed.
I have read the judgment of Narine, J.A. and agree with it.
I. Archie
Chief Justice.
I too, agree.
G. Smith
Justice of Appeal.
This matter arises out of the collapse of the CL Financial Group of Companies (C.L.F.) in January 2009. CLF is the parent company of a group which owned or controlled over thirty companies and subsidiaries located in the Caribbean, the United States of America, Europe and the Middle East. The group included companies engaged in a wide range of business activities including banking and financial services, manufacturing, trading, retail distribution, general and life insurance, forestry and agriculture, real estate, energy and petrochemicals, marine services, media and communication. CLF was the largest private conglomerate in Trinidad and Tobago.
Colonial Life (Trinidad) Limited (CLICO) was a member of the group engaged in the business of life insurance, pensions, health insurance and short term investment products, which included Executive Flexible Premiums Annuities (EFPAs), which offered high annual returns of 10% or more.
Following the collapse of CLF, the group approached the Government of Trinidad and Tobago for financial assistance. On 30th January 2009 a Memorandum of Understanding (MOU) was reached, setting out the terms and conditions under which the government would provide financial assistance to the group.
In the months that followed certain public officials, including the Governor of the Central Bank and the Minister of Finance made public statements about the terms and conditions under which the government intended to assist the group. The respondents, who are EFPA holders contend in this case that these public statements and the MOU itself, gave rise to certain legitimate expectations, inter alia, that the government would guarantee payment of all monies due to them on their investments.
In May 2010, there was a change of government in Trinidad and Tobago. In September, 2010, the new administration proposed a plan to pay off EFPA policyholders by an initial payment of $75, 000.00 and the balance by a government IOU amortised over twenty years at zero interest (the 2010 Plan).
In September 2011, the government announced a revised plan under which the EFPA holders would be issued 20 year bonds for the balances outstanding. Over the first ten years, the bonds would be discounted at a rate of 20%. Over the ensuing 11 to 20 years, the bonds could be exchanged for units in a new entity to be known as National Enterprises Limited 2 (NELL 2). Under this revised plan, the government estimated that the EFPA policyholders would receive 92 cents on the dollar for their investments. The 2010 plan and the revised plan were entirely voluntary. It was open to EFPA holders to accept the offer, or hold on to their investments.
By an amended fixed date claim form filed on 22nd November, 2012 the respondents sought judicial review of a decision of the government of Trinidad and Tobago (the Government) to proceed with the revised plan.
The respondents further claimed, inter alia, a declaration that all EFPA policyholders in Trinidad and Tobago are the beneficiaries of legitimate expectations engendered by representations made to them by or on behalf of the government:
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(a) that the government would ensure that their funds in CLICO would be safe and that it would guarantee repayment of all monies due to them.
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(b) that the government would make good the deficit in the statutory fund,
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(c) that the government would treat all policy holders equally.
The respondents further sought a declaration that to implement the CLICO plan would be unfair and unlawful unless the government makes suitable arrangements (whether by guarantee from itself or a bank) to ensure that, within a reasonable time, it will in fact yield to the respondents as promised, a sum equal to 100% of CLICO's contractual liability including interest.
Having heard full legal submissions from both sides, and having considered the evidence before her, the trial judge held that the respondents were the beneficiaries of legitimate expectations engendered by representations made to them by or on behalf of the government that:
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(i) the government would ensure that their funds in CLICO would be safe and that it would guarantee repayment of all monies due to them, and
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(ii) the government would make good the deficit in the statutory fund.
The trial judge made declarations accordingly, and ordered the government to make “suitable arrangements” to ensure that the respondents receive a sum equal to 100% of CLICO's contractual liability to them.
The facts of this matter are largely undisputed. By letter dated 13th January 2009, Mr. Lawrence Duprey, then chairman of CLF, wrote to the Governor of the Central Bank of Trinidad and Tobago (CBTT) requesting CBTT' s assistance in providing temporary liquidity support for CLF, which he said was experiencing temporary liquidity challenges due to the adverse effects of the global financial crisis.
Mr. Ewart Williams the Governor of CBTT brought this letter to the attention of the then Minister of Finance (Ms. Karen Nunez-Tesheira). There followed several meetings between officials of CLF, the CBTT, the Ministry of Finance and the Inspector of Financial Institutions. The then Prime Minister, Mr. Patrick Manning was informed of continuing developments, and became involved in discussions.
On 24th January 2009 the Governor of CBTT and the Minister of Finance held a meeting with the Prime Minister at his official residence to appraise him of the latest developments. The Governor explained that the situation at CLICO Investment Bank (CIB) another member of the CLF group and CLICO posed a systemic risk to the financial sector and advised that the government needed to act urgently and decisively, in order to resolve the liquidity problems at CIB and CLICO due to a substantial increase in the rate of withdrawals in these institutions. The Governor further advised that there was a very real risk to the stability of the financial sector and the economy should there be a run at CIB and CLICO.
As explained by Ms. Nunez-Teshira in paragraph 28 of her affidavit filed on 30th July 2012 the government and the CBTT had to intervene for the following reasons:
“(a) Key companies in the CLF Group, namely CLICO, CIB and British American Insurance Company Ltd. (BA) were experiencing serious solvency issues with assets of the companies within the group being too encumbered to meet liquidity needs, and deficits in CLICO's, CIB's and BA's respective Statutory Funds being in the order of several billions of dollars.
(b) Those solvency issues created a real potential for systemic risk to the financial system given that the CLF group owned assets reportedly worth in the vicinity of TT$101 billion, which was the equivalent of 76% of Gross Domestic Product (GDP), of which 43% was owned by companies in the group that operated in the financial sector.
(c) Among those companies was Republic Bank Limited (RBL), whose stability could have been threatened by insolvency within the group, news of which could have triggered a run on the bank.
(d) The risk to the financial system was heightened by the tremendous exposure of other key institutions in the country such as First Citizens Bank Limited (“FCB”), Unit Trust Limited (UTC), National Insurance Board (NIB) and National Gas Company (NGC).”
On 30th January 2009, a MOU was concluded between the Minister of Finance on behalf of the government of Trinidad and Tobago and CLF, for itself and as agents for CLICO, CIB and BA. The relevant provisions of the MOU are:
“1. CLF agrees to take steps to correct the financial condition of CIB, CLICO and BA by:
a. Selling all of its shareholdings in Republic Bank Limited (RBL);
b. Selling all if its shareholdings in Methanol Holdings (Trinidad) Limited (MHTL);
c. Selling all of its shareholdings in Caribbean Money Market Brokers Limited (CMMB); and
d. Selling all or any of their other assets as may be required to achieve the said correction.
The proceeds of the sale of assets referred to in clause (a), (b), (c) and (d) above will be applied to satisfy the Statutory Fund requirement of CLICO and BA under the Insurance Act, 1980 and the balancing of the third party assets and liabilities portfolio of CIB.
2. In the event that there is a shortfall after the application of the proceeds realized from the sale of the assets set out in clause 1(a), (b), (c) and (d) above, CLF warrants and undertakes to provide collateral which may include a secured charge on the fixed and floating assets of CLF, CLICO and BA sufficient to secure any financial assistance to be provided by the Government of Trinidad and Tobago (GORTT) in respect to that shortfall for the purpose of maintaining public confidence and stability in the financial system.
10. CLF shall establish and make full and true disclosure to GORTT regarding the Statutory Fund position of CLICO...
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